Wednesday, October 23, 2013

Rana Foroohar — America’s Real Economic Crisis Is Flat Wages

If you don’t get more people working, you don’t have the sort of wage competition that encourages firms to raise workers’ pay. And if you don’t have higher wages, you won’t have more robust consumption spending (which encourages firms to hire; it’s a snowballing cycle). As I have written many times, the single most worrisome thing in the economy right now is that wages are flat and have been for five years now. You don’t have to be an economist to see that you can’t have a robust recovery in an economy that is 70% consumer spending when most people haven’t gotten a raise since the financial crisis began....
Ultimately, you need wages, not just stock prices, to go up if you want a real recovery. And in order to do that, you need businesses to feel that demand is rising so they’ll start spending [on investment].
Category: Doh.

Time
Foroohar: America’s Real Economic Crisis Is Flat Wages
Rana Foroohar

Most significantly the previously indefatigable US consumer is tapped out. This has ominous implications for a global economy that has not decoupled from the US.


2 comments:

Clonal said...
This comment has been removed by the author.
Clonal said...

If you want to see the real deal, look at this graph - Real GDP per hour worked, and the real hourly wages. Do the comparison, and ask yourself - "where did the difference between the two go?"